Wednesday, October 26, 2011

Unemployment. Over 14 Million People. For 3 Years. One Idea You Can Use To Do Something About It.

There are 14,000,000 people in the United States who are unemployed.  Stop for a moment to think about that number.  Then consider that unemployment has been consistently that high throughout 2009, 2010, and 2011.

For a time each of these 14,000,000 can collect unemployment benefits while they are trying to find a new job.  While the benefits are a help, they are rarely enough.  Too many people slowly sink financially until they find new work.  In these economic times, that often takes a very long time.

Bad as that is, underemployment is worse for millions more when it lasts for many years.  Underemployment occurs when you can only find work at jobs that do not utilize all of your education and training, like the scientist who can only find work as a taxi driver.  It also occurs when your working hours are reduced long-term and you can't find equivalent full-time work anywhere else.

We can blame the economy.  But many jobs were in industries that no longer exist, or have been replaced by machines.  We can also try blaming large corporations or governments that seem too large to care.

This might be you now.  If not, it is likely to happen to you at some point in the future.  Playing the blame game won't put food on your table or keep the electricity on.

So really ... what are you going to do about it?

Wednesday, October 19, 2011

Should My IRA Make Charitable Contributions?

An important benefit of an individual retirement account (IRA) is that you can accumulate earnings on your savings dollars without paying taxes on them until you start withdrawing from the account.  This can go on for many years, but at age 70 1/2 you are required to start taking yearly minimum distributions from the account.  The amount of these distributions depends on your life expectancy according to tables published by the IRS.  Gradually as you get older, your yearly minimum distributions will get larger as your life expectancy shortens.

You are fully taxed on these distributions.  In addition, your IRA distributions may cause more of the social security payments you receive to be taxed.

Some kind people choose to donate their IRA distribution to their favorite charity.  They want to benefit the charity, obviously, but they also hope to offset the IRA income with a charitable contribution deduction.  

In some recent years, and again in 2011, the law allows for people to instruct their IRA administrator to make a contribution from their IRA directly to the charity rather than to take the money personally and then donate it.

The question is:  Should I have my IRA make my charitable contributions for me?